China-Made EVs Hit With Additional EU Tariffs

Tariffs of up to 37.6 percent on Chinese-manufactured electric vehicles go into effect July 5, initially for four months, but that could be extended into years.

A BYD 07 EV model electric car is displayed at the Beijing Auto Show in China on April 25, 2024. Pedro Pardo/AFP via Getty Images

Brussels announced on July 4 that companies that manufacture electric vehicles (EV) in China will be subjected to additional tariffs when their products are exported into the European Union market.

Tariffs of up to 37.6 percent on China-manufactured EVs were imposed by all member states starting July 5. The decision is binding and will initially apply for four months, after which it may be extended for years.

The move results from a months-long investigation by the EU’s Executive Commission, which found that China’s EV makers benefit from “unfair ”state subsidies and pose a “threat of economic injury” to its homegrown auto business, the commission said in a statement on July 4.

The EU had agreed to hold talks with Beijing over the bloc’s tariff plans, which were first unveiled on June 12. The EU’s trade commissioner, Valdis Dombrovskis, and China’s commerce minister, Wang Wentao, held their first meeting on June 22.

“The EU side emphasized that any negotiated outcome to its investigation must be effective in addressing the injurious subsidization,” the European Commission’s trade spokesperson, Olof Gill, said in a statement after that meeting.

Brussels reiterated that message on July 4 in its statement, saying that its technical talks with Beijing would continue with “a view to reaching a WTO-compatible solution,” which should “adequately” address its concerns.

The provisional duties on Chinese EVs are almost identical to the plans released last month. The commission said it slightly decreased some rates based on “comments on the accuracy of the calculations submitted by interested parties.”

According to the decision published in the EU’s Official Journal, the highest tariffs will be imposed on SAIC Group, a Chinese state-owned carmaker, at 37.6 percent. Duties apply to other Chinese carmakers also vary, with Geely facing duties of 19.9 percent and BYD 17.4 percent.

The measures also will affect Western companies that manufacture EVs in China, such as Tesla, which has a gigafactory in Shanghai. The U.S. carmaker, along with BMW and other carmakers deemed by the EU as cooperating in its probe, will be subjected to a 21 percent duty, while automakers that didn’t cooperate will be subject to a duty of 38.1 percent, according to the Official Journal.

The EU’s ongoing investigation on Chinese-made EVs is expected to continue for almost four additional months.

Following this period, the Executive Commission could propose the imposition of definitive duties, which typically remain in effect for five years, if the plan is supported by a majority of the bloc’s 27 member states in November’s vote.

‘Deglobalizing’

The Chinese regime has pledged to take “all necessary measures” to “firmly” defend its rights and interests. On June 17, for example, China’s commerce ministry initiated an anti-dumping investigation into pork imported from the EU.

In January, Beijing opened an anti-dumping investigation into European brandy, particularly cognac. The move was seen as retaliation for Brussels’s scrutiny of Chinese subsidies for EVs and medical devices.

Electric cars for export are waiting to be loaded on the "BYD Explorer No.1," a domestically manufactured vessel intended to export Chinese automobiles, at Yantai port, in Shandong Province, China, on Jan. 10, 2024. STR/AFP via Getty Images

Some analysts say Beijing’s retaliatory moves are intended to pressure Brussels into softening its stance.

“China is using whatever levers it has to push the EU into moderating its stance. That is all part of the strategic competition,” Erik Jones, director of the Robert Schuman Centre for Advanced Studies at the European University Institute based in Italy, said.

“The news about Chinese dumping investigations into EU pork exports is just the latest illustration,” he recently told The Epoch Times.

Mr. Jones said that Beijing’s retaliation could only intensify tensions with the EU, and Brussels will continue its course of “de-risking.”

“Every tit-for-tat episode gets added to the overall tension in the relationship,” Mr. Jones said. “I expect this kind of dynamic to increase and not decrease over the coming months and years.”

Brussels’s decision came after U.S. President Joe Biden announced the imposition of 100 percent duties on EVs shipped from China—a fourfold increase from the previous 25 percent duty—ahead of November’s election.

Mr. Jones said that no matter who is elected in November, the underlying structure of the EU–China relationship will “remain on the same trajectory we see today—toward more strategic competition and so also toward more ‘de-risking.'”

“The world is ‘deglobalizing,’ even if that trend is still not showing up in the trade and investment data.”